5G device prices limit adoption in the short term, but top vendors face disruption

5G smartphones will carry wholesale costs of more than $750 when they are introduced in 2019, translating to retail prices of as much as $1,000 or more.

According to a series of newly published reports from the Strategy AnalyticsDevice Technologies practice, 5G device prices will decline at a much slower pace compared to 3G and 4G handsets. Subsidies will be necessary to make 5G smartphones affordable to the mass market. The research group says:

° 5G is not a panacea for the industry ills whether one is an operator or a device vendor. There is a lot of hard work, experimentation and failure likely over the next five years.

° There is every reason to think that the transition to 5G will result in a reordering of the current list of top smartphone makers just as happened with 2G, 3G and 4G.

° Vendors must strive to be global and minimize market specific SKUs where possible, building from a global platform or be local, focused and niche. The profit drain zone is positioned at the bottom of the U-curve with volume between 40 and 60M where profits are almost impossible to realize.

° Lenovo-Motorola, LG, and ZTE to name a few are in perilous positions and must carefully execute a pragmatic 5G strategy or risk surging losses.

° Samsung and Huawei each have challenges to maintain growth with 5G due to their limited presence in China and USA respectively.